That External accounting is the sub-discipline of business accounting that primarily informs outsiders about the company's situation. It essentially corresponds to financial accounting, which is also called business accounting.
Financial accounting records all business transactions of a period using documents in a chronological and systematic manner. From this, it determines the company’s profit or loss. Its calculation variables are expenses and revenues. At the end, there are the balance sheet and profit and loss account. In the case of a capital company, annexes and a management report are also included.
Addressees and tasks
The intended recipients include shareholders, creditors such as banks and suppliers, financial authorities, employees, and the public. The external accounting department is accountable to the shareholders. It also forms the basis for taxation and serves to protect creditors. For example, banks assess creditworthiness based on financial accounting metrics.
Legal basis
Unlike internal accounting, external accounting is subject to legal regulations. In Germany, these are primarily commercial law and tax law. The Commercial Code (HGB) requires every merchant to keep books in accordance with the principles of proper bookkeeping. The time horizon is usually the business year. The annual financial statements are a past-based report and provide only limited information about future developments.
Reference to SAP Business One
In SAP Business One, the Finance module covers the records that a company is required to keep under the law. The financial reports include, among other things, the balance sheet, GuV, and the summary of amounts and balances. Tax reports and notifications to authorities, such as tax returns, recapitulative reports, and Intrastat, are also included in the localization.
Demarcation
Internal accounting is directed at the management and accounts for costs and services. For internal analyses, the data from the financial accounting often are not detailed enough.
Link to the post
The article covers financial accounting and the annual financial statements as external accounting, and mentions the Commercial Code as the basis. The professional sources confirm both of these.
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